In response to this alert, Government agents, with the assistance of Airborne Express, a private carrier, arranged a controlled delivery of computer equipment on December 21, 1994 which led to the arrest of Jason Cantor. The following day, December 22, 1994, an Airborne Express investigator informed the agents that a second man contacted their office inquiring about the controlled delivery packages. On December 23, 1994, the Government arrested Ted-John Wilson after he appeared to pick up the computer equipment. At this time, Wilson informed the agents that he was instructed to pick up the computer supplies by Paul Marino. After the Government arrested Marino, he explained that in April 1994 he attended a meeting of the New York Hack Exchange, a group of computer hackers that meets monthly for the purpose of exchanging information regarding the illegal accessing of computer systems throughout the United States. As a result of the April 1994 meeting, Marino was introduced to Andrew Zeneski, who resided in Raleigh, North Carolina. Zeneski explained to Marino that he was able to access the computer systems of two Raleigh hotels and download credit card information.
Zeneski then agreed to provide Marino with credit card numbers in exchange for computer equipment that Marino would order using the numbers. The numbers were delivered via fax. After Marino obtained the credit card numbers from Zeneski, he used them to purchase computer equipment and then sell the equipment to two fences, John Tseng and Anthony Galletta in Brooklyn, New York.
Incident to Marino's arrest, agents found 186 illegally obtained credit card numbers stolen from the Mariott Residence Inn and the Ramada Inn located in Raleigh, North Carolina. As the result of Marino's cooperation, agents were able to monitor telephone calls between Marino and Zeneski on December 29, 1994 and January 21, 1995. During this period, Zeneski informed Marino that he had obtained additional credit numbers. On January 19, 1995, the defendant advised Marino that he had a list of 100 credit card numbers to deliver, but he would not do so until he received the modem he had previously ordered from Marino.
On January 20, 1995, with Marino's assurances that the modem would be forthcoming, Zeneski agreed to send the list of new numbers. However, because the defendant was afraid that sending them by fax again would be too risky, he sent them in an encrypted form via E-mail. Zeneski then sent Marino a decoding program to retrieve the numbers.
On January 25, 1995, agents executed a search warrant at Zeneski's residence in Raleigh, North Carolina. During the search, the agents found a variety of computer equipment and discovered three credit card lists containing 64 American Express credit card numbers distinct from those that the defendant had previously supplied. On January 26, 1995, Zeneski was arrested after surrendering voluntarily.
According to the August 10, 1995 Pre-Sentence Report, the total losses resulting from this conspiracy amounted to $ 198,714. The organizer of the conspiracy was Paul Marino. Zeneski served as the source of the credit card numbers which he acquired by accessing hotel computer files. In exchange for supplying the credit card numbers, Zeneski received computer equipment valued at approximately $ 3,500.
The parties do not dispute the facts. Rather, they contest how the United States Sentencing Guidelines should be applied. Both parties agree that the Base Offense Level for this conspiracy to commit credit card fraud is 6. See U.S.S.G. § 2F1.1(a). However, the parties disagree over the enhancement that should be made as a result of the amount of money lost. The Government and the U.S. Department of Probation and Parole ("Probation Department") contend that Zeneski should be given a 7 level upward adjustment under U.S.S.G. § 2F1.1(b)(1)(I) because he should be held responsible for the entire amount of the loss, namely the sum of $ 198,714. The Government reasons that under U.S.S.G. § 1B1.3 governing "jointly undertaken activity," Zeneski agreed to supply the credit card numbers for the purpose of making fraudulent purchases, and that the success of the entire conspiracy was dependent on Zeneski's ability to obtain the credit card numbers. Accordingly, he should be held accountable for the entire loss.
In addition, the Court has already determined that the defendant should receive a 2 level enhancement for playing more than a minimal role in a scheme to defraud more than one person, and a two level downward adjustment for acceptance of responsibility. These calculations result in an offense level of 13, which translates into a sentence of 12 to 18 months.
Zeneski contests the propriety of the 7 level enhancement, arguing that he should not be held liable for the entire 198,714 loss. Rather, he asserts that he should be held responsible only for $ 3,500 in losses because that is the value of the computer equipment he received for participating in the conspiracy, and that sum represents the extent of his agreement to participate in the criminal conspiracy. According to Zeneski, if the Court attributes the balance of the money stolen would be tantamount to imposing responsibility for activity he did not jointly agree to undertake in violation of U.S.S.G. § 1B1.3, as recently interpreted in the Second Circuit's decision United States v. Studley, 47 F.3d 569 (2d Cir. 1995).
1. The Studley decision
The parties agree that the Court's decision as to the amount of "loss" attributable to Zeneski turns on its interpretation of U.S.S.G § 1B1.3 and Studley. In Studley, the defendant, Brian Studley, pled guilty to one count of mail fraud in violation of 18 U.S.C. § 1341. Studley was employed by Pacific Consulting, Inc. ("pacific"), a telemarketing operation which solicited applications for fraudulent loans, inducing the applicants to pay a $ 249 application fee when the salesperson knew no loan would be forthcoming. Studley was one of approximately twenty phone representatives who solicited applications. All twenty phone representatives sat together in one room while they worked. Each representative knew what the others were doing. It was estimated that during the life of the operation, Pacific received $ 273,153 in application fees.
Studley was sentenced to ten months of incarceration. This sentence was based in part, on this Court's interpretation of U.S.S.G. § 1B1.3(a)(1)(B) which provides,
adjustments . . . shall be determined on the basis of the following:
in the case of a jointly undertaken, criminal activity (a criminal plan, scheme, endeavor, or enterprise undertaken by the defendant in concert with others, whether or not charged as a conspiracy), all reasonably foreseeable acts and omissions of others in furtherance of the jointly undertaken criminal activity . . . that occurred during the commission of the offense of conviction, in preparation for that offense, or in the course of attempting to avoid detection or responsibility for that offense.